Student loansfor all types of students

A private student loan can help pay for college when savings, scholarships, and federal aid aren't enough

Whether you’re an undergraduate or graduate student (or a parent, relative, or other creditworthy individual helping a student pay for college), you can find a student loan designed for your field of study.

Types of private student loans

There are private student loans for undergraduates, graduates, students pursuing certificates, dental, medical, and health professions students, as well as loans for graduates studying for the bar exam, or relocating for medical or dental residencies. There are also parent loans, taken out by a parent, relative, or another creditworthy individual (not the student) that can help you pay for college.

Private student loans are issued by a bank or financial institution, (as opposed to federal student loans, which are offered by the government).

What a private student loan can be used for

Private student loans—as well as federal student loans—should be used to pay for your education expenses:

Tuition

Room and board

Fees

Books

Supplies and equipment

Computers and electronics for school

Transportation

Personal needs at school

Don’t borrow more than you need. Your federal or private student loans shouldn’t be used for vacations, entertainment, or items that aren’t directly needed for your education. Only borrow what you can afford to pay back later.

Eligibility for private student loans

For Subsidized Loans, the US Department of Education pays the interest while the student is in school at least half time, grace (if offered) and authorized deferment periods.

For Unsubsidized Loans, the borrower is responsible for paying interest during the in-school or grace periods, or a post-school deferment.

Private student loans, offered by banks and financial institutions, are based on your credit profile. Your credit—and your cosigner’s credit—are evaluated, along with other information provided on your application.

Federal student loans usually have lower interest rates than private student loans and can offer different benefits. You should generally consider them first, and then take out a private student loan if you still need money for college.

How to look for private student loans

There are differences between private student loans. It’s important to find a reputable lender; here are some ways to find the right one:

Start with your school to see if they offer a lender list.

Confirm that the lender works with your school of choice.

Ask others for recommendations on lenders.

Make sure you’re looking at the right loan for your education. There may be different loans for undergraduate, graduate, continuing education, or certificate courses.

How to compare private student loans

Once you’ve found a couple of lenders, you can compare their private student loan options to see what each offers:

Applying for private student loans

You can apply for private student loans directly from each lender’s website. You should apply after you’ve made your school decision and once you know how much you need to borrow, so you won’t have to submit separate student loan applications for schools you’re considering.

How much should you borrow

In terms of how much you should take out for college, borrow only what you think you can afford to pay back later. Think about your future career and how much you may make in your chosen field. The College Board® suggests that your monthly payments should be no more than 10 – 15% of your starting monthly salary. To help estimate your future income potential, you can visit the US Department of Labor at bls.gov.

The amount of money you can receive from a private student loan varies by lender. If your lender requires “school certification,” your school verifies your enrollment and ensures that you’re not borrowing more than the cost of attendance (including your federal student loans, scholarships, and grants).

The role of credit in private student loans

Private student loans are credit-based. That means that a lender will look at your history of borrowing money and paying it back. Federal student loans, on the other hand, are generally based on financial situation and federal guidelines rather than credit. (Note: The Federal Parent PLUS Loan is credit-based.)

If you don’t have a credit history, you’ll need a cosigner. A cosigner can be a parent, relative, or any other creditworthy individual. Their good credit history can help you get a loan (and sometimes, a better interest rate).

Along with you, a cosigner accepts responsibility for repaying your private student loan. If you keep your loan in good standing, making on-time payments, it can be a great way to build your own credit. If you fall behind or don’t pay back your loan, your cosigner’s credit can suffer if they don’t make payments.

What happens after applying for a private student loan

After you apply for our private student loans, you’ll typically get a credit approval within 15 minutes of applying. You’ll also get notices to review, accept, and e-sign your loan terms.

Your school will have to certify your loan amount before it can be disbursed (paid to the school). Then you’ll get a Final Disclosure spelling out the details.

You have the right to cancel your loan before it’s disbursed (sent) to your school.